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Saturday, October 24, 2009

No progress in economic freedom

Despite improvements in labour,
corruption, and monetary indicators, Bangladesh remains stuck in the category
of "mostly unfree" countries in an international survey on economic
freedom.

The country's economic freedom score
is 53.9, making its economy the 131st freest -- the same as last year's --
among 186 countries in the 2015 Index of Economic Freedom, an annual guide
published yesterday by Washington-based Heritage Foundation and The Wall Street
Journal.

Bangladesh was ranked 132nd in 2013
and 130th the previous year.

Its position remains unchanged at 27
among 42 countries in the Asia-Pacific region.

The country's overall score eroded
by 0.2 points since last year though it made improvements in labour freedom,
freedom from corruption, and monetary freedom outweighed by notable declines in
investment freedom and business freedom.

Launched in 1995, the Index
evaluates countries in four broad areas of economic freedom: rule of law,
regulatory efficiency, limited government and open markets.

Based on its aggregate score, each
country graded in the Index is classified as “free” (combined scores of 80 or
higher), “mostly free” (70-79.9), “moderately free” (60-69.9), “mostly unfree”
(50-59.9) and “repressed” (under 50).

Over the last five years,
Bangladesh's economic freedom hovered around the lower end of the “mostly
unfree” category, said the report.

Modest score improvements have
occurred in just four of the 10 economic freedoms (financial freedom, labour
freedom, freedom from corruption, and trade freedom), and overall policy reform
appears to have stalled.

A general disregard for the rule of
law, rampant corruption, and a judicial system that suffers from political
interference provide a weak foundation for economic modernisation.

Lack of a national consensus on the
direction of future policy changes has diminished the momentum for economic
reforms, and deteriorating prospects for near-term improvements in economic
freedom make it unlikely that the relatively high growth rates of recent years
can be maintained.

Most data used in the 2015 Index
covers the second half of 2013 through the first half of 2014.

Bangladesh scored 20 in property
rights on a scale of 0-100 as it couldn't improve its position in the area. The
score in freedom from corruption indicator is 27.

Institutional accountability is not
well established in Bangladesh, and the judiciary is not clearly separated from
the executive, according to the report.

“Government effectiveness is
undermined by pervasive graft. Contract enforcement and dispute settlement
procedures are inefficient. Antiquated real property laws and poor
record-keeping systems complicate land and property transactions. Poor
governance is one of the main barriers to foreign direct investment.”

Bangladesh has improved in the areas
of labour and monetary freedom, scoring 63.7 and 67.7 points respectively.
Business freedom, however, went down to 62.2 points.

The index said reform measures in
recent years have streamlined the procedures for establishing a business, but
other institutional deficiencies such as pervasive corruption and poor access
to credit discourage start-ups. The labour market remains underdeveloped, and
the enforcement of labour rules is ineffective.

Both trade and financial freedoms
remained unchanged at 59 and 30 points, and investment freedom dipped to 45.

It said Bangladesh has a relatively
high 13 percent average tariff rate.

Hong Kong has maintained its
status as the world's freest economy, a distinction that it has achieved for 21
consecutive years.

Despite the global progress recorded
since the Index's inception in 1995, the number of people living without
economic freedom remains disturbingly high: 4.5 billion, or 65 percent of the
world's population. And more than half of these people live in China and India.

While structural reforms in the two
countries sometimes boosted growth, the governments have failed to institutionalise
open environments that promote broad-based and sustained improvements in the
economic well-being of the population as a whole.